The future of energy: Is Manitoba Hydro ready?

The world of manipulated energy and the way we think about it is changing at warp speed. Yet only a few people are looking at what this means to the way we live now and, more importantly, how we will live in the future. For Manitoba, this is a critical issue as we have mortgaged the future for our kids on 20th century approaches to delivering hydro-electric energy to our citizens and in pursuit of export dreams.

Massive and disruptive expansions are being undertaken by Manitoba Hydro based on conditions that existed more than a decade ago. Construction is moving forward on power generation dams and delivery systems that may be obsolete by the time they go into service. Is anyone questioning the validity of that thinking now? It would appear not.

When I first started writing about Manitoba Hydro about 10 years ago, we were selling excess power at a profit. Yet for the past several years, it has cost more to deliver that power than what we can get for it and now Hydro is facing a staggering $25 billion debt in the next few years to build capacity to feed that uncertain market. Ten years ago, nobody imagined that fracking (releasing gas trapped in shale) would be a big energy disruptor. But it is – so much so that it has forced Middle East oil suppliers to drop their prices as the United States energy glut reduces the value of their product. The world’s largest consumer of energy now has energy to burn. If fracking can change world markets, as it has, Manitoba Hydro should be looking much more critically at what this will mean for our electricity exports in the future.

Meanwhile, Hydro’s export sales, according to its 2015-2016 annual report, represented just 22 per cent of the electricity sales (that is, excluding natural gas sales), although not that long ago they boasted that electricity exports constituted 31 per cent of all sales from 2004-05 to 2013-14. The trend is not a healthy one, but it was not unpredictable.

Natural gas sales are also down significantly over the previous year. (Of the 3.95 per cent price increase to domestic consumers levied in August 2015, 2.15 per cent went to the Bi-pole III deferral account.)

In the midst of all this bad news are these major changes that are affecting the market in erratic ways. Instead of offering accounting excuses for poor performance, the utility needs to be looking ahead five, 10, and 15 years to examine how changing consumption habits at home and in its export catchment will affect revenues. It is not only the sudden abundance of fossil fuels that has created a negative pull on our energy production. Across America, hydro-electric companies are preparing for a number of changes that are already having an impact on their sales.

A few years ago, Elon Musk developed an electric car that could reach speeds of a comfortable 60 miles per hour and travel 284 miles on a single charge. He powered this car with battery packs of lithium ion cells, each 2.6 inches long and .07 of an inch wide – thousands of them, packed in a case the length of the car’s chassis. He has continued to develop on this theme, creating a home energy package based on the same technology that will allow solar energy captured by day to be stored for use during the dark hours. He has made these power packages available at affordable prices and they are gaining in popularity as a defence against high electricity costs.

Now he is constructing what he calls a Gigafactory. He broke ground in Nevada in 2014. He expects to begin production by the end of this year and reach full capacity by 2018. This will allow the factory to produce enough lithium ion batteries to meet the demand – and more – created by Musk’s projected 500,000-electric-cars-a-year target. Tesla believes that by the end of 2018, the Gigafactory will produce more lithium batteries than were produced worldwide in 2013. To put this in other terms, Giga is a measurement than means billions. One gigawatt hour is the same as generating one billion watts for one hour. The factory is expected to produce batteries with a capacity of storing 35 Gigagwatt hours. Manitoba in contrast produces only 1 gigawatt a year. Not all of that reaches a destination.

As the factory and production grows, the batteries will also be used for home power walls and small business power packs. This is not some pie-in-the-sky pipe dream. It is happening now. The factory opened for assembly purposes at the end of July and by the end of this year, it will begin producing batteries, in co-operation with Panasonic, from scratch. While still in its infancy stages, home-generated power is gaining support from homeowners who use this and various other devices to reduce their off-the-grid, energy consumption costs.

Nor are lithium batteries the only possibility. As one extreme, recently the U.S. Department of Energy’s Oak Ridge National Laboratory accidentally discovered, as they attempted to turn carbon dioxide back into fuel, that nanoparticles of copper imbedded in tiny spikes of carbon and nitrogen charged with an electric current produces ethanol. This system has potential for energy storage and for recycling air pollutants.

There are doubtless many other breakthroughs in the energy field that could make the conversion of latent energy, such as that supplied by the movement of water, seem cumbersome and undesirable. It is also reasonable to expect accelerated changes in energy production and storage in a similar way to what occurred with the advent of the smart phone.

American utilities are paying attention. They are already working to integrate renewable sources of power. At a recent conference, Richard Lester, the head of Massachusetts Institute of Technology’s department of nuclear science and engineering, issued a warning. “The electricity industry over the next 20 years is going to be looking at changes, the scale of which we haven’t seen in this industry for 100 years,” he said.

Here at home, as hydro prices continue to soar to cover Manitoba Hydro’s current expansion, Manitobans are going to be looking ever harder to find alternatives. These could come in the form of competition from smaller, more efficient producers or home-based generation from solar, wind or as-yet-undiscovered technologies.

Meeting these challenges is going to take far-sighted vision. The new board, while sorting out financial priorities for now, has to be willing to move forward boldly.